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Steven Gooden, general manager of Pan Caribbean Asset Management.

Susan Gordon, Business Reporter

While many investors over the last 12 months were zeroing in on alternative investment schemes for high yields, mutual funds were offering a few investors some healthy returns as well.

In one instance, a CI mutual fund offered by Pan Caribbean Financial Services Limited up to June last year posted 119.8 per cent rate of return on US dollar investments over a 24-month period, although this was said to be a historic performance for the fund when market conditions peaked.

A mutual fund is a company of pooled investors. Each investor puts money into the fund and the professional portfolio adviser uses that cash to invest on behalf of the pool, based on the objective of the fund.

Types of fund

Some funds are energy, biotechnology, financial, consumer products or foreign-equity based.

When the mutual fund makes money, everyone in the fund benefits, and if the value of the fund falls, everyone shares in the loss.

As an investment type, mutual funds are not as well known as, say, equities, but participation is "just like being in a stock market," said Steven Gooden, vice-president and general manager of the Pan Caribbean Asset Management Company Limited.

Having bought into a mutual fund, to realise the gains, "You would have to encash the units," said Gooden. Another way is to place a redemption request for gains made by the interest.

The first foreign-based mutual funds were registered in Jamaica between 2002 and 2003. Some mutual funds known locally are the Canadian-based CI and AIC mutual funds.

FG Bond Fund

First Global Financial Services also offers a Caribbean-based bond fund called the FG Bond Fund. Guardian Asset Management, only six months ago, partnered with CI Investments to offer CI mutual funds locally to its clients.

Senior financial consultant at CI Investments, Michael Kelly, late last year 'guesstimated' that Jamaica's mutual funds market was worth about US$175 million, while Financial Services Commission data at the end of June 2007 says international interest in these funds had jumped to US$7.9 billion

Investors can sign up for the foreign funds with a minimum investment of C$500 or US$500, or approximately J$35,000.

For the First Global Caribbean fund, investors would need to start with US$10,000.

The financial institutions only request a valid identification card, a tax registration number and the completion of a purchase application form for investors to sign up.

Thereafter, investors may monitor their fund's performance on the Internet via a web log.

susan.gordon@gleanerjm.com